Treasury says economy to remain stable after Brexit vote

The national treasury is confident there will be no immediate impact from Great Britain’s decision to leave the European Union.

According to Treasury Cabinet Secretary Henry Rotich, Kenya’s economy remains well diversified to withstand effects of the Brexit decision.

The CS however says the government will closely monitor developments and ensure speedy intervention should the economy come under pressure.

“It’s too early to make an assessment at the moment. Of course the sterling pound has begun to weaken and the weakening of the sterling means strengthening of the Kenya shilling so there are impacts on that with respects to our exports to U.K,” Mr Rotich said.

The shilling held steady in Friday’s trading session, on the back of assurances by the central bank that it would step in to support the shilling should it come under pressure. Traders on the capital markets also said that there had not been any sign yet that uncertainty about the global impact of Britain’s vote was hurting the share market.

Mr Rotich said the government would have to renegotiate trade pacts with the European Union and non European countries. However with the process expected to take at least two years, he added that gave the government ample time to observe the markets.

“We have trade agreements with the E.U, so them exiting obviously will mean that we will have to renegotiate differently with the U.K,” he said.

The tourism sector could be hard hit, given the devaluing of the sterling pound could make it more expensive for tourists to come to Kenya. The United Kingdom is a key source market for tourists coming to Kenya.

Imports could also become cheaper following the weakening of the sterling pound but the value of exports from Kenya could.

“The fortunate thing is that we are in right now is that we have a much stronger balance of payment to deal with any shocks of that magnitude,” Mr Rotich said.

Report by Beatrice Eghwa